FIRST-TIME buyers are expected to dominate the housing market in the coming months as prices begin to bottom out.

In the first three months of this year, house prices fell by just 2.8pc across the country, compared with a drop of 8.3pc in the same period in 2009, new figures reveal.

And it seems that the National Asset Management Agency (NAMA) is not the only place where properties can be bought at an average 47pc discount, as the figures show that Dublin house prices have fallen by 46.8pc from their peak in 2006. Nationally, the market has corrected by 41.2pc.

According to an index of the residential property market by estate agents Sherry FitzGerald, first-time buyers accounted for more than half (51pc) of all homes sold in the last three months.

This group made up roughly a quarter of sales at the height of the property boom.

"This is a reflection of where we are in the property cycle," Sherry FitzGerald chief economist Marian Finnegan said. "You'd expect this as these people are buying out of necessity.

"For the moment it will be first-time buyers who will be dominating the marketplace."

The new figures mean that Irish house prices are back at the levels they were at the start of 2003. There are also signs of a narrowing in the price gap between Dublin and the rest of Ireland. "It's probably fair to say Dublin house prices rose at a faster rate than those in the rest of the country, and so have seen the biggest drops in prices," Ms Finnegan added.

Second-hand

The estate agent also noted an overall average drop of 2.8pc in second-hand property prices in Ireland in the first quarter of this year, representing an overall reduction of 15.7pc in the past 12 months.

Just under a fifth (19pc) of sellers sold their homes with plans to upgrade to a larger property, with 18pc selling in order to move to another county. A number of other "positive underlying demand trends" were further mentioned, such as a rise in viewing levels, fewer withdrawals and multiple bidding on individual properties.

"There is no doubt that it is still too early to call the bottom of the overall market but the emerging evidence continues to support a view that the Dublin market is beginning to bottom out," said the agent.

"This trend could be disrupted by events such as rising interest rates, or other factors which could negatively impact confidence. However, if current trend lines persist there is every reason to believe that the Dublin market will stabilise during the latter half of 2010."